Limited cash cattle activity developed Tuesday, but as would be expected given the overall lack of processing ability, cash prices remained significantly lower than last week's average price levels. Although there still isn't enough cattle traded to establish a good market trend, the cattle that sold posted prices of $94 to $95 live in the South and $149 to $150 dressed in the North. This is $5 to $6 per cwt lower live and $7 to $8 per cwt lower dressed than last week's average. The uncertainty of how many cattle will once again be bought on the cash market is likely to add even more pressure through the end of the week. Although basis levels still remain well above average, they are quickly moving away from the historical levels in March and early April, creating additional concern that additional basis erosion will develop in the coming weeks. Cattle futures are expected to remain mixed in a moderate range early Wednesday morning. Following the firm pressure Tuesday, live cattle and feeder cattle market still remain firmly planted above long-term lows, but unable to show significant short- or long-term buyer support given the limited processing capability and growing uncertainty of food service demand. Although retail beef demand remains strong, there is uncertainty about moving all cuts of meat through retail channels as a weaker economy is likely in the coming days and weeks. The focus on ground beef stocks seem to be the focus at local stores, with ample supplies of higher end cuts still on the shelves. This could continue to disrupt the ability to push beef cutout values higher even though overall movement of product remains strong. Wednesday slaughter is expected at 92,000 head.
The ability to bring renewed stability to the lean hog complex Tuesday is helping to calm overall market fears just a bit. June lean hog futures bounced higher Tuesday, limiting the overall pressure in the complex, but the complex is extremely weak. With May crude oil futures moving below $0 early in the week and into negative price territory not only stretched the thinking and mindset of most market watchers, but the narrative quickly moved to the potential of that happening in the hog market. Although at current prices and consumer demand for meat still remaining strong, it is unlikely that this would take place, the lean hog complex continues to be the most pressured of the livestock and ag markets, combined with strong production levels that will likely continue through much of the summer. Futures are expected to open mixed in a moderate trading range, although processing levels in the next couple of weeks remains a major factor in moving market-ready animals through the food chain. Cash hog values are expected steady to $2 per cwt lower with most bids expected $1 per cwt lower. Slaughter Wednesday is expected at 345,000 head. Saturday runs are expected at 146,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Limited bullish news is available in the livestock and cattle market, but the continued demand for beef at the consumer level remains strong. This is sparking additional strong gains in beef cutout values through the week. | 1) | Cash cattle values are starting to quickly weaken. Although cash trade still remains limited, the initial moves are pointing to firmly lower price levels due to lack of processing ability. |
| 2) |
Cash basis levels still remain well above average levels through late April. Although this is quickly changing, the potential for positive basis levels to remain over the upcoming weeks could help to minimize market losses a bit.
| 2) |
The inability for packers to run, or run at full capacity continues to be the weak link in the complex. Until the coronavirus cases are reduced within employee populations, active schedules may remain limited.
|
| 3) |
Firm support in June lean hog futures has helped to push prices well above long-term lows. The ability to hold these gains could help to establish a market low, and draw limited but supportive buying back into the complex.
| 3) |
Cash hog values continue to develop as daily hog processing levels have continued to erode the last couple of weeks. Packers have limited ability to move hogs through the system, which is backing the system up very quickly, and affecting every area of hog production.
|
| 4) | Pork values continue to surge higher, helping to focus on potential support in retail price levels, and growing demand for pork available to the consumer. | 4) |
Lean hog futures still remain near contract lows. This is likely to create additional pressure on all segments of the industry over the near future.
|
 |
| #completeherdhealth |
No comments:
Post a Comment